Enhancement of SLR Holdings in Held to Maturity (HTM) category

In the Statement on Developmental and Regulatory Policies dated 09.10.2020, RBI said that the limits under Held to Maturity (HTM) category is increased to 22 percent of NDTL, in respect of SLR securities acquired on or after September 1, 2020, up to March 31, 2021. RBI on September 1, 2020, increased the limits under Held to Maturity (HTM) category to 19.5 per cent. The statement said that the purpose of increase HTM holding to stimulate orderly market conditions and ensure affable financing costs.  The Apex bank has also decided to extend the dispensation of enhanced HTM limits of 22 percent up to March 31, 2022, for securities acquired between September 1, 2020, and March 31, 2021. “To give more certainty to the markets about the status of these investments in SLR securities after March 31, 2021, it has been decided to extend the dispensation of enhanced HTM limits of 22 percent up to March 31, 2022, for securities acquired between September 1, 2020, and March 31, 2021,” it said. RBI also spelled out that the HTM limits would be restored from 22 per cent to 19.5 percent in a phased manner starting from the quarter ending June 30, 2022. “It is expected that banks will be able to plan their investments in SLR securities in an optimal manner with a clear glide path for restoration of HTM limits,” it said.

Banks have to maintain a stipulated proportion of their net demand and time liabilities (NDTL) in the form of liquid assets like cash, gold, and unencumbered securities. Treasury bills, dated securities issued under market borrowing program and market stabilization schemes (MSS), etc. also form part of the SLR. Banks have to report to the RBI every alternate Friday their SLR maintenance. RBI levies penalties for failing to maintain SLR as mandated.

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